U.S. stocks came off session highs but still closed higher Wednesday after a series of developments boosted expectations that a U.S.-China trade deal could be reached in the coming months.

How did the benchmarks fare?

The Dow Jones Industrial Average
DJIA, +1.38%
rose 157.03 points, or 0.6%, to end at 24,527.27, while the S&P 500 index
SPX, +1.32%
advanced 14.29 points, or 0.5%, to 2,651.07. The Nasdaq Composite Index
COMP, +1.03%
climbed 66.48 points, or 1%, to 7,098.31. The Dow was up more than 450 points at its session high.

What drove the market?

Both Chinese officials and the Trump administration have made a concerted effort to convince market participants that negotiations will soon bear fruit.

President Donald Trump, in an interview with Reuters, said he would intervene in the arrest of Huawei’s chief financial officer Meng Wanzhou if it would help ensure a trade deal with China. The executive was granted bail by a Canadian judge on Tuesday after more than a week in detention, but will be subject to close monitoring. She was arrested Dec. 1 at the behest of U.S. authorities and awaits possible extradition to the U.S. where she faces charges related to allegations she lied to banks about the company’s ties to a firm that did business in Iran, in violation of U.S. sanctions.

Those developments helped spur some relief buying as investors have been carefully watching the arrest, which has angered China, for signs that it could scuttle a trade cease-fire brokered last month.

Meanwhile, investors also digested a report Wednesday morning that China is prepared to make significant changes to its industrial policy, allowing foreign corporations greater access to the Chinese market. At the same time, it plans to drop numerical targets for domestic sourcing of inputs for high-tech products that had been part of the country’s controversial China 2025 economic development plan.

There is also a trend shift under way in the market. For the past three months, investors have largely been signaling fear over the longevity of the current expansion by rotating into the safety of utilities and consumer staples—the two only two sectors gaining value during that time.

This week has told a different story, with the tech stocks, as measured by the Technology Select Sector SPDR Fund
XLK, +1.52%
outperforming every other S&P 500 sector, giving hope to bulls who argue that the U.S. economic expansion has enough strength and stamina left to keep these firms growing rapidly for the foreseeable future.

Core prices, which eliminate volatile food and energy costs, rose 0.2% month-over-month, also in line with expectations.

What were strategists saying?

“Volatility of late can be blamed on tariffs and trade talks,” Tatyana Bunich, president of Financial 1 Wealth Management Group told MarketWatch. The fundamental health of the U.S. economy helps justify a day like Wednesday, she said, when stocks are bid up on rumors of progress on the U.S.-China trade front, rather than concrete steps to bring down barriers.

The market is in “a good mood, with the Huawei CFO released on bail, and strong overnight action in Asia on constructive trade [headlines],” Dave Lutz head of ETFs at JonesTrading wrote in a note.

What stocks were in focus?

Shares of Under Armour Inc.
UAA, +2.30%slumped 8.9% to lead S&P 500 decliners after disappointing analysts at an investor day with guidance for coming years.

United Rentals Inc.
URI, +3.30%
is up 6.3% after it reaffirmed its 2018 guidance and issued its 2019 outlook.

Shares of Lowe’s Cos.LOW, +3.18%
rose 2.9% after the company announced a new $10 billion stock buyback program and reaffirmed its fiscal 2018 earnings and sales targets.

Verizon Communications Inc.VZ, +0.46%
slid 2.7% after Morgan Stanley analyst Simon Flannery downgraded the stock to equal-weight from overweight, noting that Verizon may end up spending more than is currently estimated to facilitate its 5G rollout.

U.S.-listed shares of Tencent Music Entertainment GroupTME, +10.64%
jumped 7.7% on their first day of trading. The company priced its initial public offering at the low end of its price range and raised about $1.1 billion in the deal.

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